Monday, February 15, 2010

Which Moral Hazard?

Donn Zaretsky and Michael Rushton went around the block on moral hazards in museum management. Rushton concluded: "In the end ... I appreciate DZ's point that we just are not yet in a position to say with accuracy whether the costs of the moral hazard I worry about [of a safety net promoting lax management] exceed the benefits from flexible access to funds through deaccessioning in times of crisis. But I will maintain the cost is there, even if, under new, relaxed norms governing deaccessions, the costs would not immediately be apparent. Should we change those norms because of a one-time shock to endowments as a result of the financial crisis?"

As my comment there notes (in my characteristically-orthogonal way), "Zaretsky's position [about benefits of flexible access] brings up a more basic question that the moral hazard discussion tends to obscure: shouldn't museums use all their assets to best fulfill their mission? By mobilizing the financial value in their collections, museums can implement programs that increase the cultural value of those same collections -- more exhibitions, research, conservation and engagement.

"This mobilization seems all the more compelling if it doesn't require deaccessions. Partial title sales approaches, like James Maroney's tenancy in common method or my own Coaccession(tm) equitable servitudes system, let museums have their Monet and money, too, so artworks can support the arts without leaving the public domain.

"If museums can let their communities hold their collections' financial value while retaining control over those collections' cultural rights, then maximizing the collections' cultural value in the community seems like the right thing to do. In fact, doesn't fiduciary responsibility obligate the trustees and directors to do so? On what basis do they hold excess financial reserves in a passive form?

"This comment isn't meant to be absolutist about mobilizing finance to elevate culture. I just hope to show that there are other points of view and concerns beyond the moral hazard of deaccession. Museums don't have to deaccession if they use partial title sales. So, once we get past deaccession as a method, why not have your Monet and money, too?"

Briann Greenfield was great in responding to a comment not even on her own blog, willing to expand her range. I'd love to see Michael Rushton's response to my point, but now that nearly a month has passed, I fear it may be a long while, if ever. I still think it's a good point, which is why I share it here as well as there.

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